US judge blocks Tennessee from barring Kalshi’s sports events contracts

By Nate Raymond

Jan 13 (Reuters) – A federal judge has temporarily blocked Tennessee gaming regulators from barring prediction markets operator Kalshi from offering events contracts in the state that they said constituted an illegal form of sports wagering.

U.S. District Judge Aleta Trauger in Nashville issued a temporary restraining order on Monday preventing the Tennessee Sports Wagering Council and the state’s attorney general from enforcing state gaming and sports wagering laws against Kalshi.

The company sought the order after the council, which regulates sports wagering in Tennessee, on Friday sent Kalshi a cease-and-desist letter demanding it halt its “illegal gambling operation” or face criminal and civil penalties.

New York-based Kalshi gives its users the opportunity to profit from predictions on events ranging from sports and entertainment to politics and the economy. It began offering sports events contracts nationally in January 2025.    

The state regulator said Kalshi offered unlicensed sports wagers in violation of Tennessee laws and regulations, including those prohibiting anyone under 21 from betting on match outcomes.

In a lawsuit, Kalshi argued that Tennessee was unconstitutionally trying to ban sports event contract trading on its platform, a market regulated solely by the federal Commodity Futures Trading Commission.

The judge in a brief order said Kalshi was likely to succeed on the merits of its claims. She scheduled a January 26 hearing on whether she should issue a longer-lasting preliminary injunction.

Kalshi and the council did not respond to requests for comment on Tuesday.   

Kalshi has been engaged in litigation with at least eight states that have accused it of flouting their gaming laws by offering users the ability to bet on the outcomes of sporting events such as football and basketball without a license.

The company is registered with the CFTC as a designated contract market, and it argues that the federal regulator has exclusive jurisdiction over the events contracts that trade on its platform.

Its position suffered a major legal setback in November, when a federal judge in Nevada, a leader in gambling regulation, found that the company was subject to that state’s gaming rules. Kalshi is appealing.

(Reporting by Nate Raymond in Boston; Editing by Alison Williams)